Iraq and health care reform may be the dominant issues in the 2008 presidential race, but global warming is quickly emerging as a top-tier concern - at least among the Democrats.

Illinois Sen. Barack Obama on Monday became the latest Democrat to present his plans on climate change, calling during a speech in New Hampshire for deep cuts in greenhouse gas emissions and a $150 billion, 10-year program to pay for clean-energy projects.

The highlight of Obama's speech was his proposal that under any future "cap-and-trade" system - where emissions are capped and permits to pollute would be traded - industries would be required to pay for the allowances to emit greenhouse gases, rather than be given them for free.

Environmentalists support this "100 percent auction" approach because it would put the burden on the industry while also raising tens of billions of dollars for clean-energy projects. The money also could be used to give energy rebates to low-income consumers if their energy bills increase.

"We hope that all presidential candidates embrace the concept of 100 percent auction," said Gene Karpinski, president of the League of Conservation Voters. "That ensures the polluters pay and that the resources from the pollution go to important public benefits, like promoting clean alternative energy."

However, critics say the approach would saddle electric utilities, manufacturers and other U.S. companies with billions of dollars in new costs that probably would be passed on to consumers in higher energy bills and price increases for goods.

The issue is critical to California and other states that already have passed climate change rules and are setting up their own cap-and-trade systems.

In his speech at a library in Portsmouth, N.H., Obama criticized President Bush for holding a summit last month in Washington on climate change while refusing to agree to mandatory, economy-wide cuts in emissions, which many other countries have enacted.

"Global warming is not a someday problem, it is now," Obama said.

Obama, 46, a first-term senator and a leading Democratic candidate for president, said he supports reducing greenhouse gas emissions to 1990 levels by 2020, and backs an 80 percent reduction below 1990 levels by 2050, the same targets California has set in its new rules.

He added, "Unlike the other cap-and-trade proposals that have been offered in this race, no business will be allowed to emit any greenhouses gases for free. Businesses don't own the sky, the public does, and if we want them to stop polluting it, we have to put a price on all pollution."

Obama is the first top-tier Democratic candidate to embrace the idea, although New Mexico Gov. Bill Richardson also supports the approach. Connecticut Sen. Chris Dodd has called for auctioning off some allowances, and former Sen. John Edwards of North Carolina has said he would raise about $10 billion by selling the rights to pollute.

Obama's comments were a challenge to the Democratic front-runner, New York Sen. Hillary Rodham Clinton, who has not yet taken a detailed stand on the issue. She plans to announce her global warming plan in the next few weeks, but in a speech on the economy Monday she called for a new $50 billion fund for cleaner energy, renewable fuels and more efficient buildings.

Luis Vizcaino, Clinton's California spokesman, said she backs a cap-and-trade system and "supports auctioning the majority of allowances to reduce costs for consumers and prevent windfall profits for utilities and other energy companies."

The Northeast states are designing a regional cap-and-trade system that would put the burden on industry. Four states - Maine, Massachusetts, New York and Vermont - have issued regulations calling for 100 percent of allowances to be auctioned.

California officials still are grappling with the issue. The Air Resources Board must issue draft rules by next summer and is debating whether to give allowances away to industry - as the United Kingdom has done - or whether the government should charge for the right to pollute.

Boxer, in an interview with The Chronicle last month, said: "We want to have the right mix. We are very mindful of the need to transition the economy."

To industry groups, how the allowances are divided is the most important issue in any climate bill. The system, depending on how it is written, could favor some companies and industries over others. Some industry leaders who have lobbied Congress to pass climate legislation oppose the 100 percent auction approach.

"It's an area that where you stand depends on where you sit," said Frank Maisano, a Washington lobbyist who represents refiners and utilities.

While there are some differences between the Democratic candidates - Dodd, for example, favors a carbon tax - all support mandatory limits on greenhouse gases. Republicans, with the exception of Arizona Sen. John McCain, who wrote a bill to cap emissions, have mostly shied away from the issue, in part to avoid antagonizing business groups and some conservative voters who believe the perils of global warming have been exaggerated.